by Howard R. Gold, Special for USA TODAY

by Howard R. Gold, Special for USA TODAY

Last week Amgen, one of the USA's biggest biotechnology companies, reported a sensational quarter.

Earnings per share leaped 25% and revenue jumped 11% from the second quarter of 2013.

Amgen's chief executive officer Robert Bradway called it "robust."

But Amgen also announced it would lay off up to 2,900 workers -- from 12% to 15% of its workforce -- and shutter facilities in Colorado and Washington State.

The company, which will take at least a $775 million charge against 2014-2015 earnings to cover restructuring costs, will offer voluntary severance packages and maybe jobs for some laid-off employees in expanded research facilities in South San Francisco and Cambridge, Mass.

Wall Street drove Amgen's stock up 5% to an all-time high above $130. "Investors are particularly excited about the restructuring plan . . . that could save $700 million per year," Barron's wrote.

Big layoffs and restructurings aren't new, of course. This year, corporate stalwarts like IBM, Microsoft and Hewlett-Packard have laid off thousands.

Amgen, however, announced big layoffs in the midst of plenty. It joins a small fraternity of companies that have combined layoffs with better-than-expected earnings. They include EMC earlier this year and Travelers, American Express, and Cisco Systems in 2013.

In a memo to employees, CEO Bradway said the cuts came "from a position of financial and operating strength."

But maybe not for long, he suggested, alluding to "patent expires and loss of exclusivity for some of our important legacy products."

Like big pharmaceutical companies, biotech companies have a limited time to market their drugs exclusively. When patents expire, generic drug makers can sell them much cheaper, sharply reducing profitability.

Blockbuster Amgen drugs that have lost exclusivity (or soon will) include anti-anemia drugs Aranesp and Epogen (which was manufactured in Colorado) and white-blood-cell boosters Neulasta and Neupogen.

Enbrel, a rheumatoid arthritis treatment developed by a Seattle-based company that Amgen bought, will enjoy patent protection through 2028.

In his memo, Bradway said Amgen must "shift resources from maturing areas of our business to . . . our strongest opportunities," such as oncology and cardiovascular disease and "prepar(e) for new product launches." Cost savings from the layoffs will support that.

"It is vital for us to invest in our continuing innovation and the launch of our new pipeline medicines," Amgen spokesperson Cuyler Mayer wrote in an email. "We are optimizing the utilization of our sites by closing some sites and concentrating our presence in fewer locations."

Nonetheless, growing Amgen's revenue and earnings and launching new products comprise 80% of the performance goals in top executives' annual cash incentive awards, according to Amgen's proxy statement.

Also, Amgen's board of directors recently changed how it sets equity awards, which comprise 73% of the CEO's compensation. Amgen's total shareholder return (TSR) will now be measured against the Standard & Poor's 500 index.

So, much of top executives' compensation will now depend on whether Amgen's stock beats the S&P, something it has barely done during the past five years. (Amgen has frozen the much smaller cash component of top executives' pay.)

"What will most directly affect the CEO is the stock price growth," says Aaron Boyd, director of governance research at Equilar, an executive compensation and governance data firm, who examined Amgen's compensation plan for USA TODAY. "His incentive is to bring a strong rate of return for shareholders."

At Monday's closing price, Equilar valued CEO Bradway's equity holdings, including options, at nearly $52 million. A 25% advance in Amgen's stock would make his current holdings worth almost $70 million.

So, Bradway, a former top investment banker at Morgan Stanley for 20 years, is pursuing a strategy that's in sync with Amgen's incentive plan.

The workers who are losing their jobs can't say that.

"Companies today have broken the social contract relative to individual employees and relative to individual communities to achieve their financial goals," says Washington State Rep. Reuven Carlyle, who represents the Seattle district where the Amgen facility is located.